In Which “Bush”… Became The Sole Holdings Of His [Consumer] “Hedge” Fund…

Forgive me, but later last night, the highly-hilarious comments from Billy inspired me to ponder whether the stated goal in this “consumer” hedge fund was actually to scorebush. That is, Mr. Shkreli eventually placed the entire (if waif-ish) “hedge” fund — in the stock of the company named at right. If nothing else, that was a stupid (non-diversified “consumer”) strategy.

[And why on Earth would giving the involved trader crazily discounted (nearly free) stock — in an unrelated life science company, be a meaningful “incentive” for him to work harder on the “consumer” (strip club) hedge fund? That was the defense’s contention, yesterday, on cross. But he was never an employee, nor had any duties, in the life science company’s management.] Puzzling, that.

At least semi-seriously, in the early light of a fine Wednesday morning here — this will be the open thread for all things trial related today.

Mr. Brafman recently lost a motion in another felony pre-trial — to delay that other trial — given how far over this one is running. I’d now expect more like seven weeks of testimony, minimum.

Mr. Brafman’s relentless objections — and the resulting lengthy sidebars are both stretching the timeline, and disrupting the prosecution’s narrative flow.

But there is no doubt that the jury is seeing a man who lies about essentially… everything.

And I don’t think it will matter too much to the jury, that the threatened ex-employee was also a Galleon-fund involved whistle-blower/employee/ trader.

I think Mr. Shkreli is highly likely to see a ten year sentence. Five — with day for day credit — if he behaves while locked up.

Onward — should be a[nother] sensational day!

नमस्ते

 

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57 thoughts on “In Which “Bush”… Became The Sole Holdings Of His [Consumer] “Hedge” Fund…

  1. FTD says:

    Condor & Billy & Bmartin , Martin just said on his live stream when asked by a guest in a chat room “what did you guys end up doing today?”

    Martin : whooped the governments ass

    Oh man I can’t wait til the house of cards comes down 🙂

    Liked by 1 person

    • billythekid9919 says:

      May I be the fist to say: “No Shit” Marty didn’t attend Columbia. Further, claiming to have audited a class but then not correcting people who “heard” you graduated from Columbia at 16 years old, is not quasi-truthful… It’s just a plain old lie. One of many!

      Liked by 1 person

    • R West says:

      “I think Mr. Shkreli is highly likely to see a ten year sentence. Five — with day for day credit — if he behaves while locked up.”

      There’s not that kind of credit in the federal system … it’s a 15% reduction for good behavior.If he gets 10 years or less, he can go to minimum security. More than 10 years, he has to start in a prison with fences around it. The BOP rules are discussed in the Matthew Kluger interview. Once thing Shkreli is probably doing right … you don’t get much of a break for a plea bargain (based on the Kluger case) … so might as well try it …but he does risk a longer sentence. Under Sarbox, if the CEO willfully and wrongly certified the financial reports, it’s 20 years. He really has a good chance of receiving a 20-year sentence, which means he would serve 17 … with the first seven in a real prison with fences!

      Liked by 1 person

      • condor says:

        Thanks, R West for the correction — on the 15%. As most here know, I’m an M&A life science lawyer, not a criminal defense counsel (not at trial, anyway). My experiences in the criminal courts have all been pro bono cases — and only one was a federal felony…

        That said, I expect to a certainty he’ll be found guilty of parking — that’s ten.

        The other seven counts — I think it likely (but not a certainty) that he’s found guilty. Those run concurrent — to 20 total.

        But he has not been charged (nor indicted) as a CEO under Sarbanes-Oxley.

        The charges he’s been indicted on are the ones that are easier to prove — like wire fraud, etc.

        A SoX charge requires proof that he knew it was false as he signed it.

        So the AUSAs chose low hanging fruit to get to 20 — in my view.

        We will see… Welcome, and do stop back!

        Namaste…

        Liked by 1 person

    • billythekid9919 says:

      The dispute followed the testimony of Lee Yaffe, a business associate of Shkreli’s who convinced his father to invest $100,000 in Shkreli’s first hedge fund, Elea Capital, and spent five years trying to get the money back. Yaffe testified he was paid $200,000 to be a consultant for Retrophin but never actually provided any services – and eventually had to pay the money back after reaching an agreement with the government not to prosecute him.

      Prosecutors claim Shkreli entered into the deals with fewer than 10 investors, including Allergan Plc CEO Brent Saunders, after losing money in two hedge funds he ran before starting Retrophin. Allergan spokesman Mark Marmur didn’t immediately respond to a request for comment.

      The judge sent jurors home, telling them to return early on Friday afternoon, so the parties can argue their positions on the dispute. She said she was “very uncomfortable” allowing prosecutors to introduce the agreements without calling the witnesses to the stand for cross-examination.

      “We should hear from them, especially if their representations are critical to issues being decided,” Matsumoto said.

      Liked by 1 person

      • billythekid9919 says:

        I think this is the first witness to draw a line all the way back to Elea Capital. If Marty’s defense was that MSMB funds helped start RTRX with early investments at the time of founding. How then does he try to make this sham agreement legit to an investor clear back to Elea Capital? Does not compute.

        Liked by 1 person

    • FTD says:

      I don’t think they should push this. They need to count their blessings the jury is still with them & paying attention. Yea, it would be fantastic to have more witnesses. But you just can’t tally up all the fraud with this guy. I think it is impossible.

      And look, this goes into the problem with how much additional time you add on. You aren’t going to be able to go into September for this.

      Liked by 1 person

      • billythekid9919 says:

        I think while they are sticking up lie upon lie they might as well keep going. The jury might have reason to distrust one, maybe two, possibly three witnesses. But when the number of witnesses that keep coming forward with ONE common chord: Shkreli told lies big and small. Skipped out on rent, didn’t follow through on giving people thousands of shares that he said he would, didn’t pay salaries as agreed, etc. etc. etc. I don’t see how Shkreli or defense lawyers could feel good about where this trial is going. Unless they are just completely diluted.

        Liked by 1 person

      • condor says:

        I’ll post the briefs when each files them — but there are lots of other ways to get these agreements before the jury.

        We shall see — but I bet we don’t get treated to any live testimony from “he, of the high forehead”… a/k/a Allergan CEO Sanders.

        Though it would be a hoot, to listen in on that cross examination! Serial price gouger (like Marty!) — just much bigger numbers involved — and serial inverter (claiming that asking American pharma companies to pay US corporate income tax is “unAmerican”. That after his failed attempted inversion — with Pfizer as a counter-party)…

        Hilarious stuff!

        Like

  2. FTD says:

    There’s your curveball for this week, Condor. Martin is going to be gloating on his livestream of the junior varsity because they have more testimony to his shenanigans.

    You can delay a week if you want,Brafman. You have to face the music with Marty eventually. Which goes back to my central question: WHO ELSE has Martin defrauded?

    Liked by 1 person

  3. FTD says:

    Trial Drama happening: 🙂

    Condor says Namaste my sign off is going to be “Mama Se Mama Sa Makou Sa” from MJ’s “Wanna Be Starting Somethin’ ” via Hugh Maskela chant. 🙂

    Liked by 1 person

  4. billythekid9919 says:

    Like

    • aldt440 says:

      Hey, if you’re gonna call me out at least provide evidence as well as facts to support your claim. Ad hominem attacks are for high school kids. If you think I don’t understand the crux of the arguments dominating this blog, you are sorely mistaken.

      It’s not my fault you guys have Stockholm syndrome and are too lazy to do your own research. I’m trying to help you guys out here… If I try and explain things, you guys get mad and called it School House Rock lecture. If I don’t explain things, you guys get mad too.

      For those that missed it, I just pointed out yesterday to Billy that the SEC caused an even bigger problem due to their failure to act in a timely manner. The SEC drags their feet a lot and I think it’s an important topic. It’s important because we are paying them to regulate markets with our tax money and they’re messing it up. I’m guessing their mistake caused at least $30 million in damage to the moms & pops invested in ETFs. Can somebody tell me why the SEC waited to charge? Was it for political reasons? Could someone in the spotlight benefit from the statute of limitations expiration?

      So, yeah.. This is how my brain works and I’ve done quite well with this strategy throughout my life.

      …And FTD if you really want to “Follow The Dough” and live up to your name, there are far more serious financial crimes out there you might want to look into. Thinking outside the box, and not simply following the heard, when studying these crimes is a tremendous asset. Unlike this Shkreli charade, serious financial crimes actually rip you off daily and studying as well as learning how to defend against them will improve your lifestyle. JFYI

      Liked by 1 person

      • billythekid9919 says:

        Again you’re self identifying as DoucheTroll. I’ve already given all the supporting evidence needed to label you as such. I’m glad you’re finally coming to terms with it. The first step in rehabilitation is acceptance.

        As for calling anyone in here lazy because they don’t buy your tin foil had B.S. I’d like to say go F*)( yourself. I mean that in the nicest possible way. SHRDT4K.

        Liked by 1 person

      • billythekid9919 says:

        SHRDT4K, you actually didn’t explain exactly how the SEC is responsible for Marty’s crimes. You stopped at blaming law enforcement for the crime committed. Did the SEC lose all investor money in MSMB? Nope. Did the SEC create sham consulting agreements to rob RTRX to pay back MSMB investors? Nope.

        Please educate us oh wise one.

        “I’m guessing their (SEC) mistake caused at least $30 million in damage to the moms & pops invested in ETFs. Can somebody tell me why the SEC waited to charge?”

        Like

      • aldt440 says:

        The SEC isn’t responsible for Marty’s crimes, however they are culpable for not doing their job. They’re a referee. If players are playing rough and dirty, like most securities traders do because market regulation is a joke, and somebody gets hurt because the referee isn’t doing their job, what’s the point of having a referee or playing in the game? We pay the SEC and other agencies to regulate markets and they suck at it. KBIO was a huge mess and even larger than the initial fraud that could have been prevented if we had a good referee. People are getting pounded in every way and direction right now. A good and FAIR referee will make the game (financial regulation) more enjoyable and beneficial for all.

        Here’s some aftermath from the KBIO carnage:

        Although it might not be illegal, this guy and a whole bunch of others got pounded on the way up:

        http://www.zerohedge.com/news/2015-11-20/desperate-novice-trader-may-be-suicidal-if-he-didnt-cover-short-kbio-squeeze-goes-fu

        These guys got pounded on the way back down. This is my post in response to you yesterday:

        “I’m referring to the short squeeze pump after Nov 19th 2015 and all of the people that got in late. The last ones to the party got screwed after he got arrested. Are you familiar with the securities class action suit against him?? Does 15-cv-05841 in the United States District Court of Northern California ring a bell?”

        What don’t you get about my position? The markets aren’t regulated or fair at all. I can provide tons of evidence to support my claim.

        John Corzine’s MF Global saga is an internet cult classic and the poster child for preferential treatment in what is supposedly a fair market. When revenue wasn’t cutting it, John Corzine bet the house on one trade and $1.6 Billion just disappeared in ways not much different from Shkreli’s The guy was never even charged for the crime!!

        http://fortune.com/2013/11/15/how-mf-globals-missing-1-5-billion-was-lost-and-found/

        After reading that article, can you at least see how the “market integrity” argument seems laughable to me?

        Here’s a story about a regulator that wanted to regulate but couldn’t and got fired instead:

        https://www.theguardian.com/commentisfree/2014/oct/05/carmen-segarra-whistleblower-wall-street-federal-reserve

        Liked by 1 person

      • billythekid9919 says:

        So you feel sorry for a “novice trader” that was short KBIO when Marty came in at sub $1? Do you understand shorting at all? Clearly he didn’t. I don’t feel sorry at all for that guy. The SEC didn’t make that guy take a short position in a stock that’s worth less than $1. That’s a free market lesson he won’t soon forget.

        Liked by 1 person

      • billythekid9919 says:

        It sounds to me like those people who are claiming they were harmed from KBIO trades are going to have their day in court. What’s unfair about that? Are you trying to say regulators need to have a crystal ball and eliminate bad behavior from the market before it happens? Again my response to you yesterday on the topic was: “you need to be realistic”. People who invest money are certainly not forced to by anyone are they? They do so because they want to make money.

        Sometimes they get carried away and do things they don’t understand, like shorting a dog shit biotech stock when it’s about to be liquidated, but then someone steps in. That’s just life in the Big 10 my friend. No amount of SEC regulation is going to legislate away stupidity.

        Liked by 1 person

      • billythekid9919 says:

        Re: 15-cv-05841

        “I’m referring to the short squeeze pump after Nov 19th 2015 and all of the people that got in late. The last ones to the party got screwed after he got arrested.”

        Pre Marty KBIO Trading in early November 2015 $.95-$2.00

        Marty Buy-in Announcement November 19th 2015 KBIO $10.40 (+420%-995% from early November ’15)

        High: 11/23/2015 KBIO $39.50 (+1,857%-4,057% from early November ’15)

        Marty Arrest News: December 15th 2015 KBIO $23.59 (+1,079%-2,383% from early November ’15)

        Stock Halted, Not Trading: 12/16/2015-1/12/2016

        Next Trade 1/13/2016 KBIO $4.39 (-89% from high)

        Anyone buying a biotech stock must understand the volatility involved. Especially a stock who has gotten into penny stock territory.

        By “last ones to the party” I’m assuming you mean, people who were still buying at $24 in December 2015 when the short term pop, from the short squeeze, was already over?

        Can we both agree, the only people foolish or desperate enough to be buying at $39.50 in November 2015 were the novice short sellers trying to cover? (I.E. Joe Campbell)

        Let’s further assume that the “last ones to the party” were investors who were legitimate long “investors”. These people were buying a stock that was already up 1,000%-2,000% in less than 60 days. Piggybacking after the fact isn’t exactly the most profitable investing strategy often times.

        If they had just Googled: “Shkreli” they would have uncovered a lot of material which may have caused them to think twice about investing with him. The information about litigation related to Shkreli, RTRX and MSMB was already out there. I know because I was reading all available information I could find at the time and well before. People who decided to invest in KBIO in late 2015 bear some of the responsibility to do their own research.

        Investing is a big boy game. If you expect to have training wheels provided by the SEC to keep Joe Sixpack from getting murdered when he does something he doesn’t understand… You’re living in a dream world. There are no training wheels in the securities markets. If you can’t stand to lose and infinite amount of money don’t short a $1 stock. If you can’t stand to lose all you’ve invested don’t be long a biotech stock that’s gone up 1000%+ in less than 1 month.

        Market regulation is imperative to free markets. But you’re expecting something far beyond what is realistic. Regulators can’t stop fraud or abuse before the fact. After the fact, investors get their day in court.

        But the SEC isn’t here to make the game “enjoyable or beneficial for all” as per your wish.

        Liked by 1 person

    • aldt440 says:

      Billy, you are missing the point. Do you understand that, ultimately, you and I are paying for the aftermath of stuff like this? There’s nothing fair about the insane volatility present in today’s markets that only benefits professionals. Again, they are ripping us off overtly and will get another bail out by the public if the whole thing falls apart like it did in 2008.

      Applying your logic to every day events, I shouldn’t step outside or get onto an airplane because I don’t understand jet engine propulsion. The FAA doesn’t require people to study aerodynamics or flight maintenance logs.. why is that?

      Liked by 1 person

      • billythekid9919 says:

        I’m not missing the point. I just don’t buy into your “rigged game” theory. Sorry.

        People getting on an airplane aren’t sitting in the cockpit. So your analogy doesn’t apply. If you’re shorting a stock you might want to educate yourself as to the risks.

        If you are going to take up investing as a hobbyist, you’d better understand the rules of the road or you risk getting bitch slapped into learning the hard way. That’s just the way the world works.

        If you can’t handle that, or you think there should be training wheels, maybe you don’t have what it takes to invest in securities directly.

        All of this 2008, bail out, MF Global etc. etc. etc. isn’t worth discussing. If you think the market is rigged then don’t participate.

        People who are too lazy to try to understand the market default to the “rigged game” B.S.

        There is a certain amount of market manipulation that happens in thinly traded stocks. But nobody has to deal in thinkly traded stocks. But no matter what the investor bears much of the responsibility to understand what it is they are putting their money into.

        How exactly are the markets today exhibiting “insane volatility”?

        Liked by 1 person

  5. billythekid9919 says:

    Others on Twitter are trying their hand at Shkreli related comedy.

    Like

    • FTD says:

      That last one you posted with his cat. That person is Shkreli sycophant defined. Amazing how many gullible girls are still hanging around hoping he notices them. Kind of sad you can’t have a rational conversation with any of these people. They don’t even know they are caught up in worshipping a false perception. 🙂

      Liked by 2 people

  6. aldt440 says:

    What Condor, you think “going all in” on Rick’s Cabaret is a bad investment? I’m assuming Shkreli and / or members of his team did plenty of research… Just check out what I found on Wikipedia:

    Rick’s Cabaret International, Inc. is an American operator of strip clubs, nightclubs, and adult entertainment websites founded in 1983. Based in Houston, Texas, Rick’s (under the RCI Hospitality Holdings aegis) operates clubs under the names Rick’s Cabaret, Jaguars Club, Club Onyx, Tootsie’s Cabaret, Temptations Cabaret, Downtown Cabaret, Cabaret North, Cabaret East, Silver City, Vivid Cabaret, and XTC Cabaret. Nightclub & restaurant brands include Vee Lounge, Bombshells (an emerging breastaurant chain), and Ricky Bobby Sports Bar & Saloon. It also operates the websites NaughtyBids.com, an auction site; CouplesTouch.com, a dating site for swingers; and pornography website xxxpassword.com. The company’s Media Group publishes the strip club trade publications Exotic Dancer and Club Bulletin, and operates 25 industry websites.

    Here’s a pic of Eric Langan, the CEO, Chairman, and what I’m assuming is his executive team celebrating 20 years on Nasdaq:

    Like

  7. FTD says:

    A martin observation that I have noticed watching the stream from time to time:

    He likes to reference that he reads quite a bit. One of the books he always pulls out of his hat is “Infinite Jest” but he never talks about what the book is about. I have a plausible explanation why that is.

    It is my theory that Martin hasn’t read the book and he just scanned the NY Times (or wherever) & drops the book title whenever the topic is discussed what Martin has read.

    Infinite Jest is known as a very complex dense surreal look at existence & quite the critical acclaim to it. David Foster Wallace has a certain cache to his name. People namedrop him quite a bit. Martin likes to impress people at every chance he can get. This is why you see him on the stream clutching that chemistry book & clutching that React programming guide. He is aware of when the camera is on when it comes to moments like that.

    I think we have a person who can’t stop being a con man, he’s a con man as soon as there is an audience to impress & influence. It doesn’t matter the size, he’s about influencing any outcome that he can *hedge* in his favor. You see, martin is even building a ponzi scheme on social media. That’s his enterprise what he puts into the most time. That’s my observation for the day. Nothing to do with the trial per se, it just shows us a composite of the character & why trusting this man with anything is absolutely pointless. 🙂

    Liked by 2 people

    • billythekid9919 says:

      You’re exactly right FTD! I’ve had that thought many times when he claimed to be working very hard on new drugs, in his apartment. Also, when exactly finding time to do all this difficult academic work when he’s always streaming his life. In the streams all he does is pointlessly copy and paste numbers into spreadsheets. I’d hesitate to say that’s pointless most of the time, but he has proven to be the worst hedge fund manager EVER. So nobody is ever going to trust him with their money again. Condor has pointed out repeatedly that he likely has very little of his own money left.

      Liked by 1 person

      • FTD says:

        That’s a valid point you make,Billy. I have no idea how much money he has but it seems like he’s burning through cash. He doesn’t cook, he doesn’t clean, he doesn’t go on the subway, he orders nonstop from amazon.

        I would not be surprised if Martin gambled his money away on the market on bets that he doesn’t share with his youtube/discord/facebook audience. There is no one to be critical of him, he will continue to behave in a irresponsible way. He’s a man child suffering from arrested development. SO WHY would he stop trying to get that big win? I don’t think he can. Everyone he surrounds himself with tells him he is a great person.

        Mean while who was calling up people worried about his mental state? His sister. I’ve never heard anything about his brother, I think that’s a missing link that no one talks about. He’s kind of close to him, I hear.

        Liked by 1 person

  8. FTD says:

    7 more weeks? Condor, that could put the trial in a different momentum. You could burn the jury out. Remember, these people aren’t machines & they need to get back to their day to day life.

    How on earth are you going to have a energetic jury for 7 more weeks??!?! Color me skeptical, Condor. The defense can’t be ecstatic over that.

    Liked by 1 person

    • condor says:

      So sorry — I am subtracting the week of jury selection; trial proper is seven weeks total — leaves four more weeks before the jury gets the case, and retires, to begin deliberations. From there, I would expect a couple of days to get a “guilty” on at least one count, of the eight.

      That’s my guess — but it is a guess, only.

      Namaste!

      Like

      • FTD says:

        Ohhhh I was going to say. there needs to be a end point when you have a trial like this. This isn’t a serial killer trial….yet. 🙂

        Liked by 1 person

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